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How often should you review your 401K?
You should evaluate and review your 401k every 90 days because as the markets change, so will your returns in your 401k. It’s amazing to me how many people believe they can retire just because they have a 401k yet they never bother to look at it. That’s just like someone saying, “Well, I must have money in the bank because I have a checkbook.” It just doesn’t work that way.
Avoid these mistakes with your 401k
Just because you have a 401k doesn’t mean you’re on track to retire and achieve your dreams and goals. You might not be putting in enough money on a regular basis to help you reach your goals. Also, the funds allocated in your 401k might be underperforming.
Another mistake many people make is setting up their 401k just like another person who works with them. You should never do this because they could have different retirement and lifestyle goals than you. Also, they may be able to handle more volatility in their portfolio than you can.
The best way to set up your 401k
The best way to make sure your 401k is set up to work towards your goals and the lifestyle you want to have in retirement is to create a financial blueprint. By doing this, you are able to project what kind of rate of return your 401k needs in order for you to reach your goals.
How to consistently track and review your 401k
A financial blueprint will also help you track your 401k so you know the returns it is generating for you. Then you will know if you are really on track to achieve your retirement goals.
Once you set up these basic fundamentals, you will need to review your 401k every 90 days so you can make adjustments according to the changes in the markets.
The 401k that performs the best
The 401k that performs the best is the one where the owner was very active in it and updated it on a regular basis. I have encountered many situations where two different people set up their 401k’s exactly the same but the one that out performed the other did so because that person had a financial blueprint, stayed on top of it, tracked it, and made adjustments with the market’s fluctuations.
How to Create a financial blueprint
I would love to help you create a custom financial blueprint that will help you maximize and review your 401k. You can work with me and our entire team of specialists to build Your Financial House©. You can find out more about that process here. Then you can live confidently knowing you have a plan that is guiding you towards your specific dreams and goals.
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Greg Powell is President and CEO of Fi Plan Partners, an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. Fi Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.